Community banks don’t have to disappear

Michael Boukadakis

The Wall Street Journal recently detailed the demise of the National Bank of Delaware County, a small community bank that had been in business since 1891, after it bought Bank of America’s sole branch in an upstate New York town. “People waited in four-hour-long lines at the Monticello, N.Y., branch and withdrew nearly half of their deposits, moving them to banks with more reliable technology … The community bank, which had been in business for more than a century, eventually sold itself in a fire sale,” the Journal dolefully reported. But despite cautionary tales, community financial institutions aren’t doomed. 

Community banks have made a positive impact on our country, and they can continue their legacy with help from both traditional and non-traditional players. They’ve also played an important role in the lives of so many Americans. I’m one of them. When I was starting out as a young entrepreneur and needed additional capital to grow my business, all the big banks turned me away. It was a small community bank in Tulsa, Okla., that took a chance on me, and I’m still banking with that outfit 30 years later. 

Since that time, the banking game has definitely changed. It’s no longer just about getting more accounts and deposits; it’s about servicing account holders in the ways they want to connect. It’s about enabling customer engagement across an increasing number of channels and platforms. With technology rapidly transforming our world, customer service looks a lot different than it did a decade ago, much less a century ago.

Consumers expect a banking experience as modern as their one-click shopping, app-based ride services and voice-controlled digital assistants. They want easy and convenient access to their financial accounts using the latest digital devices — anytime, anywhere. That means banks of all sizes need an omnichannel strategy that integrates web, mobile, SMS texts, email and voice. And by voice, I don’t just mean phone.

More than one in three consumers now own a smart speaker like Amazon’s Alexa, Google Assistant, Apple’s Siri, Cortana or Bixby, according to data from Adobe Analytics. And even more consumers use digital voice assistants on their smartphones, Pew Research finds. Now is the time for community financial institutions to get on board with voice banking because conversational engagement will soon extend beyond smart speakers and smartphones and will be used increasingly via software in a wider range of voice-enabled platforms, such as smart watches, televisions and automobiles. Conversational voice banking need not remain a “big-bank” technology; community banks can roll out this next-generation convenience as well.

Community institutions typically don’t have the IT staff or budget for R&D and compliance like big banks. Consumers, however, still want the technology that the major players offer but smaller banks sometimes can’t afford. But all is not lost; community financial institutions can continue to succeed by creatively capitalizing on their strengths and thinking outside the box. In today’s environment, with companies offering “right-sized” software-as-a-service solutions for institutions of all sizes, seeking the right technology partners can enable community banks to continue to meet consumer preferences for a friendlier financial institution and simultaneously satisfy consumer demands for a technology-enhanced banking experience.

Innovators are reimagining the consumer experience and have developed turn-key solutions that equip smaller community financial institutions with modern technologies. Leveraging artificial intelligence and data analytics allows these institutions to meet the demands of digitally-savvy consumers with high-tech expectations. And this is not “tech for tech’s sake”; innovation in customer engagement is critical to the success of community institutions today. It should work hand-in-hand with the institution’s traditional customer channel experience.

 Balancing the importance of in-person and digital customer engagement is crucial for community banks to protect their market share. Consumers want their financial institutions to meet them where they are, in the communications channels they like to use. In addition to smiling faces, community institutions need a technology-based, speed-first strategy. Luckily, community bankers have a history of putting technology to work for their customers. United American Bank in Knoxville, Tenn., for example, pioneered home-computer banking, bringing the service to its customers first in December 1980. Technology developers, such as Clinc AI, can help community banks lead again.

“The disappearance of hometown, community banks is not good for America,” the final slide of an NBDC shareholder presentation once read. I agree. But I’m confident that looking beyond their own walls for technology solutions will allow smaller banks to keep providing the level of personalized service that only community financial institutions can.


Michael Boukadakis is the CEO of ENACOMM, a fintech company that empowers banks, credit unions and credit card companies with affordable, intelligent solutions for improving the customer experience, fighting financial fraud and increasing operational efficiency.